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10 Jun 2013

UK Workers Should Expect 39% Lower Retirement Income

British workers should expect a dramatic fall in their income when they retire, with the average income falling by more than one-third, according to government figures, the Guardian reported.

UK workers will see their income drop by an average of 39% when they retire, according to research based on data provided by HM Revenue & Customs. Research shows that whilst the average income for UK employees is £19,000, the average pension income is just £11,600. This suggests that people who rely on their pension income may be forced to live off much less than expected.

The study found there were serious variations in the drop in income across the country. Employees based in London are going to see the largest gap between their income whilst working and what they receive in retirement. In the capital city, the average earnings come in at £20,300 but go down to a mere £12,000 after retirement.

People located in the east of England can expect a fall of 40%, the research found - from £19,900 to £11,900. By contrast, the difference in Dorset was much lower (29%), but this was partly due to the fact that the area had a lower working income of just £17,000.

Experts commented that people should make up for falling retirement income by staying at work longer. Many people made the mistake of underestimating how long they would live in retirement and how much money they would need to live on – they started saving up later, which resulted in a smaller pension pot than they might have hoped for, the Guardian informed.

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